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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Cadence Design Systems Inc | NASDAQ:CDNS | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-7.34 | -2.76% | 259.00 | 258.40 | 259.49 | 268.9299 | 258.16 | 267.00 | 3,483,342 | 00:56:00 |
Second Quarter Backlog of $6.0 Billion
Updating 2024 Revenue Outlook to 13% YoY Growth
Cadence Design Systems, Inc. (Nasdaq: CDNS) today announced results for the second quarter of 2024.
Second Quarter 2024 Financial Results
“Cadence delivered strong results for the second quarter of 2024, with robust demand for our cutting-edge technologies from AI, hyperscale, and automotive customers,” said Anirudh Devgan, president and chief executive officer. “I'm pleased with the strong momentum of our Cadence.AI portfolio and our next generation Z3 / X3 hardware systems, and am excited about the growing demand for our industry leading products from an expanding foundry ecosystem.”
“I am pleased with our strong Q2 results. We exceeded our outlook on all key financial metrics, closing Q2 with backlog of approximately $6 billion,” said John Wall, senior vice president and chief financial officer. “A good finish to the first half of the year, combined with ongoing demand for our solutions, sets us up for strong growth in the second half of 2024.”
CFO Commentary
Commentary on the second quarter of 2024 financial results by John Wall, senior vice president and chief financial officer, is available at www.cadence.com/cadence/investor_relations.
Business Outlook
For fiscal year 2024, the company expects:
For the third quarter of 2024, the company expects:
The company utilizes a long-term projected non-GAAP tax rate, which reflects currently available information, as well as other factors and assumptions. The non-GAAP tax rate is subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in the company’s geographic earnings mix, or other changes to the company’s strategy or business operations. The company expects to use the current normalized non-GAAP tax rate through fiscal 2025 but will re-evaluate this rate periodically for significant items that may materially affect its projections.
Reconciliations of the financial results and business outlook from GAAP operating margin, GAAP net income and GAAP diluted net income per share to non-GAAP operating margin, non-GAAP net income and non-GAAP diluted net income per share, respectively, are included in this press release.
Business Highlights
Audio Webcast Scheduled
Anirudh Devgan, president and chief executive officer, and John Wall, senior vice president and chief financial officer, will host the second quarter 2024 financial results audio webcast today, July 22, 2024, at 2 p.m. (Pacific) / 5 p.m. (Eastern). Attendees are asked to register at the website at least 10 minutes prior to the scheduled webcast. An archive of the webcast will be available starting July 22, 2024 at 5 p.m. (Pacific) and ending September 16, 2024 at 5 p.m. (Pacific). Webcast access is available at www.cadence.com/cadence/investor_relations.
About Cadence
Cadence is a pivotal leader in electronic systems design, building upon more than 30 years of computational software expertise. The company applies its underlying Intelligent System Design strategy to deliver software, hardware and IP that turn design concepts into reality. Cadence customers are the world’s most innovative companies, delivering extraordinary electronic products from chips to boards to complete systems for the most dynamic market applications, including hyperscale computing, 5G communications, automotive, mobile, aerospace, consumer, industrial and healthcare. For 10 years in a row, Fortune magazine has named Cadence one of the 100 Best Companies to Work For. Learn more at www.cadence.com.
© 2024 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the Cadence logo and the other Cadence marks found at www.cadence.com/go/trademarks are trademarks or registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.
This press release contains forward-looking statements, including Cadence's outlook on future operating results, financial condition, strategic objectives, business prospects, technology and product developments, industry trends and other statements using words such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “will,” and words of similar import and the negatives thereof. Forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside Cadence’s control, and which may cause actual results to differ materially from expectations expressed or implied in the forward-looking statements, including, among others: (i) Cadence’s ability to compete successfully in the highly competitive industries in which it operates and realize the benefits of its investments in research and development, including opportunities presented by AI; (ii) the success of Cadence’s efforts to maintain and improve operational efficiency and growth; (iii) the mix of products and services sold, the timing of orders and deliveries and the ability to develop, install or deliver Cadence’s products or services; (iv) change in customer demands or supply constraints that could result in delays in purchases, development, installations or deliveries of Cadence’s products or services, including those resulting from consolidation, restructurings and other operational efficiency improvements of Cadence’s customers; (v) economic, geopolitical and industry conditions, including that of the semiconductor and electronics industries, government regulations and trade restrictions, and rising tensions and conflicts around the world such as in the Middle East and with respect to Taiwan; (vi) capital expenditure requirements, legislative or regulatory requirements, changes in tax laws, interest rates, currency exchange rate fluctuations, inflation rates, Cadence’s upcoming debt maturities and Cadence’s ability to access capital and debt markets; (vii) Cadence’s acquisition of other companies, businesses or technologies or the failure to successfully integrate and operate them; (viii) potential harm caused by compromises in cybersecurity and cybersecurity attacks; (ix) events that affect cash flow, liquidity, or reserves, or settlement assumptions Cadence may take from time to time with respect to accounts receivable, taxes and tax examinations, litigation, regulatory or other matters; (x) the effects of any litigation, regulatory, tax or other proceedings to which Cadence is or may become a party or to which Cadence or its products, services, technologies or properties are subject; and (xi) Cadence’s ability to successfully meet corporate governance, environmental and social targets and strategies. In addition, the timing and amount of Cadence’s repurchases of its common stock are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors.
For a detailed discussion of these and other cautionary statements related to Cadence’s business, please refer to Cadence’s filings with the U.S. Securities and Exchange Commission, including its most recent report on Form 10-K, subsequent reports on Form 10-Q and future filings.
All forward-looking statements in this press release are based on management's expectations as of the date of this press release and, except as required by law, Cadence disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
GAAP to Non-GAAP Reconciliation
Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with generally accepted accounting principles, or GAAP. Investors are encouraged to review the reconciliation of non-GAAP measures contained within this press release with their most directly comparable GAAP results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance.
To supplement Cadence’s financial results presented on a GAAP basis, Cadence management uses non-GAAP measures that it believes are helpful in understanding Cadence’s performance. One such measure is non-GAAP net income, which is a financial measure not calculated under GAAP. Non-GAAP net income is calculated by Cadence management by taking GAAP net income and excluding, as applicable, amortization of intangible assets, stock-based compensation expense, acquisition and integration-related costs including retention expenses, investment gains or losses, income or expenses related to Cadence’s non-qualified deferred compensation plan, restructuring and other significant items not directly related to Cadence’s core business operations, and the income tax effect of non-GAAP pre-tax adjustments.
Cadence management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of Cadence’s core business operations and therefore provides supplemental information to Cadence management and investors regarding the performance of the business operations, facilitates comparisons to the historical operating results and allows the review of Cadence's business from the same perspective as Cadence management, including forecasting and budgeting.
The following tables reconcile the specific items excluded from GAAP operating margin, GAAP net income and GAAP net income per diluted share in the calculation of non-GAAP operating margin, non-GAAP net income and non-GAAP net income per diluted share for the periods shown below:
Operating Margin Reconciliation
Three Months Ended
June 30, 2024
June 30, 2023
(unaudited)
GAAP operating margin as a percent of total revenue
28%
31%
Reconciling items to non-GAAP operating margin as a percent of total revenue:
Stock-based compensation expense
8%
8%
Amortization of acquired intangibles
2%
2%
Acquisition and integration-related costs
2%
1%
Restructuring
0%
0%
Non-qualified deferred compensation expenses
0%
0%
Special charges
0%
0%
Non-GAAP operating margin as a percent of total revenue
40%
42%
Net Income Reconciliation
Three Months Ended
June 30, 2024
June 30, 2023
(in thousands)
(unaudited)
Net income on a GAAP basis
$
229,520
$
221,120
Stock-based compensation expense
87,569
76,608
Amortization of acquired intangibles
20,155
14,920
Acquisition and integration-related costs
20,715
13,946
Restructuring
(33
)
—
Non-qualified deferred compensation expenses
1,697
3,155
Special charges
1,233
—
Other income or expense related to investments and non-qualified deferred compensation plan assets*
(27,048
)
(2,508
)
Income tax effect of non-GAAP adjustments
16,890
6,509
Net income on a non-GAAP basis
$
350,698
$
333,750
* Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.
Diluted Net Income Per Share Reconciliation
Three Months Ended
June 30, 2024
June 30, 2023
(in thousands, except per share data)
(unaudited)
Diluted net income per share on a GAAP basis
$
0.84
$
0.81
Stock-based compensation expense
0.32
0.28
Amortization of acquired intangibles
0.07
0.06
Acquisition and integration-related costs
0.08
0.05
Restructuring
—
—
Non-qualified deferred compensation expenses
0.01
0.01
Special charges
—
—
Other income or expense related to investments and non-qualified deferred compensation plan assets*
(0.10
)
(0.01
)
Income tax effect of non-GAAP adjustments
0.06
0.02
Diluted net income per share on a non-GAAP basis
$
1.28
$
1.22
Shares used in calculation of diluted net income per share
273,520
272,996
* Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.
Cadence Design Systems, Inc. Condensed Consolidated Balance Sheets June 30, 2024 and December 31, 2023 (In thousands) (Unaudited)June 30, 2024 December 31, 2023 Current assets: Cash and cash equivalents
$
1,058,955
$
1,008,152
Receivables, net
564,851
489,224
Inventories
171,508
181,661
Prepaid expenses and other
401,074
297,180
Total current assets
2,196,388
1,976,217
Property, plant and equipment, net
449,422
403,213
Goodwill
2,417,747
1,535,845
Acquired intangibles, net
664,038
336,843
Deferred taxes
892,963
880,001
Other assets
605,183
537,372
Total assets$
7,225,741
$
5,669,491
Current liabilities: Current portion of long-term debt$
349,732
$
349,285
Accounts payable and accrued liabilities
505,392
576,558
Current portion of deferred revenue
678,598
665,024
Total current liabilities
1,533,722
1,590,867
Long-term liabilities: Long-term portion of deferred revenue
88,823
98,931
Long-term debt
998,935
299,771
Other long-term liabilities
343,369
275,651
Total long-term liabilities
1,431,127
674,353
Stockholders' equity
4,260,892
3,404,271
Total liabilities and stockholders' equity$
7,225,741
$
5,669,491
Cadence Design Systems, Inc. Condensed Consolidated Income Statements For the Three and Six Months Ended June 30, 2024 and June 30, 2023 (In thousands, except per share amounts) (Unaudited)Three Months Ended Six Months Ended June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 Revenue: Product and maintenance
$
960,457
$
922,790
$
1,873,842
$
1,886,532
Services
100,224
53,789
195,942
111,737
Total revenue
1,060,681
976,579
2,069,784
1,998,269
Costs and expenses: Cost of product and maintenance
94,363
74,218
169,758
174,456
Cost of services
44,907
22,640
94,709
46,874
Marketing and sales
186,725
167,070
367,314
333,736
Research and development
370,740
354,416
749,698
704,711
General and administrative
63,436
54,605
132,152
108,132
Amortization of acquired intangibles
6,667
4,302
12,074
8,569
Restructuring
(33
)
-
247
-
Total costs and expenses
766,805
677,251
1,525,952
1,376,478
Income from operations
293,876
299,328
543,832
621,791
Interest expense
(12,905
)
(8,877
)
(21,597
)
(18,137
)
Other income, net
34,739
7,973
103,518
16,257
Income before provision for income taxes
315,710
298,424
625,753
619,911
Provision for income taxes
86,190
77,304
148,590
156,987
Net income
$
229,520
$
221,120
$
477,163
$
462,924
Net income per share - basic
$
0.85
$
0.82
$
1.77
$
1.72
Net income per share - diluted
$
0.84
$
0.81
$
1.74
$
1.70
Weighted average common shares outstanding - basic
270,912
269,714
270,259
269,607
Weighted average common shares outstanding - diluted
273,520
272,996
273,532
273,078
Cadence Design Systems, Inc. Condensed Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2024 and June 30, 2023 (In thousands) (Unaudited)
Six Months Ended
June 30,
June 30,
2024
2023
Cash and cash equivalents at beginning of period$
1,008,152
$
882,325
Cash flows from operating activities: Net income
477,163
462,924
Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization
87,202
70,432
Amortization of debt discount and fees
684
626
Stock-based compensation
175,698
150,896
(Gain) loss on investments, net
(80,599
)
554
Deferred income taxes
(9,506
)
(20,171
)
Provisions for losses on receivables
614
720
ROU asset amortization and change in operating lease liabilities
(1,410
)
(3,543
)
Other non-cash items
212
1,834
Changes in operating assets and liabilities, net of effect of acquired businesses: Receivables
(49,384
)
41,208
Inventories
(15,978
)
(16,981
)
Prepaid expenses and other
(39,868
)
50,793
Other assets
(38,967
)
(31,838
)
Accounts payable and accrued liabilities
(93,078
)
(37,049
)
Deferred revenue
(18,599
)
1,269
Other long-term liabilities
15,013
9,497
Net cash provided by operating activities
409,197
681,171
Cash flows from investing activities: Purchases of investments
(2,095
)
(29,212
)
Proceeds from the sale and maturity of investments
43,864
1,505
Purchases of property, plant and equipment
(78,800
)
(46,655
)
Cash paid in business combinations, net of cash acquired
(720,821
)
(55,379
)
Net cash used for investing activities
(757,852
)
(129,741
)
Cash flows from financing activities: Proceeds from revolving credit facility
-
50,000
Payments on revolving credit facility
-
(150,000
)
Proceeds from term loan
700,000
-
Payment of debt issuance costs
(944
)
-
Proceeds from issuance of common stock
133,272
77,502
Stock received for payment of employee taxes on vesting of restricted stock
(166,903
)
(78,988
)
Payments for repurchases of common stock
(250,010
)
(450,119
)
Net cash provided by (used for) financing activities
415,415
(551,605
)
Effect of exchange rate changes on cash and cash equivalents
(15,957
)
(8,225
)
Increase (decrease) in cash and cash equivalents
50,803
(8,400
)
Cash and cash equivalents at end of period$
1,058,955
$
873,925
Cadence Design Systems, Inc. (Unaudited)
Revenue Mix by Geography (% of Total Revenue)
2023
2024
GEOGRAPHY Q1 Q2 Q3 Q4 Year Q1 Q2 Americas44%
41%
43%
44%
43%
46%
49%
China17%
18%
17%
15%
17%
12%
12%
Other Asia18%
18%
19%
19%
19%
20%
19%
Europe, Middle East and Africa15%
17%
15%
16%
16%
17%
14%
Japan6%
6%
6%
6%
5%
5%
6%
Total100%
100%
100%
100%
100%
100%
100%
Revenue Mix by Product Category (% of Total Revenue)2023
2024
PRODUCT CATEGORY Q1 Q2 Q3 Q4 Year Q1 Q2 Custom IC Design and Simulation20%
22%
22%
22%
22%
22%
21%
Digital IC Design and Signoff25%
27%
28%
29%
27%
29%
27%
Functional Verification, including Emulation and Prototyping Hardware32%
27%
26%
24%
27%
25%
25%
IP11%
11%
11%
13%
12%
12%
13%
System Design and Analysis12%
13%
13%
12%
12%
12%
14%
Total100%
100%
100%
100%
100%
100%
100%
Cadence Design Systems, Inc. Impact of Non-GAAP Adjustments on Forward Looking Operating Margin As of July 22, 2024 (Unaudited)Three Months Ending Year Ending September 30, 2024 December 31, 2024 Forecast Forecast GAAP operating margin as a percent of total revenue
27.7% - 29.3%
29.7% - 31.3%
Reconciling items to non-GAAP operating margin as a
percent of total revenue:
Stock-based compensation expense
9%
8%
Amortization of acquired intangibles2%
2%
Acquisition and integration-related costs2%
2%
Non-qualified deferred compensation expenses0%
0%
Non-GAAP operating margin as a percent of total revenue†
40.7% - 42.3%
41.7% - 43.3%
†The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. Cadence Design Systems, Inc. Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per Share As of July 22, 2024 (Unaudited) Three Months Ending Year Ending September 30, 2024 December 31, 2024 Forecast Forecast
Diluted net income per share on a GAAP basis
$0.83 to $0.93
$3.82 to $4.02
Stock-based compensation expense
0.38
1.43
Amortization of acquired intangibles0.10
0.33
Acquisition and integration-related costs0.10
0.34
Non-qualified deferred compensation expenses-
0.02
Special charges-
-
Other income or expense related to investments and
non-qualified deferred compensation plan assets*
-
(0.32)
Income tax effect of non-GAAP adjustments(0.02)
0.15
Diluted net income per share on a non-GAAP basis†
$1.39 to $1.49
$5.77 to $5.97
†The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP * Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. Cadence Design Systems, Inc. Impact of Non-GAAP Adjustments on Forward Looking Net Income As of July 22, 2024 (Unaudited) Three Months Ending Year Ending September 30, 2024 December 31, 2024 ($ in millions) Forecast ForecastNet income on a GAAP basis
$228 to $256
$1,049 to $1,103
Stock-based compensation expense
106
391
Amortization of acquired intangibles26
90
Acquisition and integration-related costs27
93
Non-qualified deferred compensation expenses-
6
Special charges-
1
Other income or expense related to investments and
non-qualified deferred compensation plan assets*
-
(87)
Income tax effect of non-GAAP adjustments(5)
41
Net income on a non-GAAP basis†
$382 to $410
$1,584 to $1,638
†The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP * Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.CDNS–IR Category: Financial, Featured
View source version on businesswire.com: https://www.businesswire.com/news/home/20240721138030/en/
Cadence Investor Relations 408-944-7100 investor_relations@cadence.com
Cadence Newsroom 408-944-7039 newsroom@cadence.com
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